Paper Info
Title
Speed Matters: The Role of Free Software Offer in Software Diffusion
Abstract
Many software products are available free of charge. While the benefits resulting from network externality have been examined in the related literature, the effect of free offer on the diffusion of new software has not been formally analyzed. We show in this study that even if other benefits do not exist, a software firm can still benefit from giving away fully functioning software. This is due to the accelerated diffusion process and subsequently the increased net present value of future sales. By adapting the Bass diffusion model to capture the impact of free software offer, we provide a methodology to determine the optimal number of free adopters. We show that the optimal free offer solution depends on the discount rate, the length of the demand window, and the ratio of low-valuation to high-valuation free adopters. Our methodology is shown to be applicable for both fixed and dynamic pricing strategies.
Year
DOI
Venue
2010
10.2753/MIS0742-1222260307
J. of Management Information Systems
Keywords
DocType
Volume
software product,new software,Software Diffusion,optimal free offer solution,Bass diffusion model,Free Software Offer,software firm,free offer,optimal number,free adopter,accelerated diffusion process,free software offer
Journal
26
Issue
ISSN
Citations 
3
0742-1222
23
PageRank 
References 
Authors
1.33
10
2
Name
Order
Citations
PageRank
Zhengrui Jiang18010.69
Sumit Sarkar2835260.90